Buy Jyothy Labs; target of Rs 240: Sharekhan

Sharekhan's research report on Jyothy Labs

The company is one of the better-performing companies in the small-cap consumer goods space with eight consecutive quarters of double-digit revenue growth, driven by a mix of price and volume growth. Although pricing will lead growth in the near term, the company endeavours to achieve consistent double-digit revenue growth (largely driven by volumes), banking on its growth levers in the long run. The company’s OPM is expected to remain at 12-13% in FY2023. However, the same is expected to improve with a significant reduction in raw-material inflation.

Outlook

We retain our Buy rating on Jyothy Labs Limited with a revised price target of Rs. 240. The stock is trading at 23.9x/19.7x its FY2024E/FY2025E earnings, which is at a discount to large consumer goods stocks.